Kothari and Sons vs V. Krishna Rao

Satyanarayana Rao, J.—The defendants, a firm of stock brokers and commission agents, Madras, are the appellants in this second appeal

They were sued by the respondent to recover a sum of Rs. 1064-14-0 for damages caused by, their negligence in effecting a sale of 40 shares of

the Travancore National and Quilon Bank Ltd., hereinafter called the Bank. The shares were of the paid-up value of Rs. 25 each, the face value of

which was Rs. 50. The pltff. with a view to have the shares sold, requisitioned the services of the defendants and on 9-5-1938 by Ex. P. 1 the

shares were handed over to the defendants. The bank went into liquidation in 1938 and on 10-3-1939 a demand was made on the plaintiff by the

liquidators of the bank for payment of the unpaid call money. He thereupon came to know from the defendants by their letter of 20-4-1939 that

the shares were in fact sold to the bank. The plaintiff made an unsuccessful attempt in the High Court by an application to have the share register

rectified by excluding his name from the list of contributories. The application was dismissed on 19-12-1941. The plaintiff was thereafter obliged to

pay from time to time the balance calls amounting in all to Rs. 1000 and odd. The first payment was made on 13-3-1944 and the last was on 20-

4-1945. On 1-10-1945 the present suit was instituted by the plaintiff to recover the sum as damages on the ground that the defendants) by their

negligence brought about an invalid sale as they should have known that the bank could not buy its own shares by reason of the prohibition

contained in Section 55, Companies Act. The suit was instituted in the District Munsif''s Court Vellore.

The suit was resisted by the defendants on three principal grounds : firstly that it was barred by limitation under Article 90 Limitation Act;

secondly that the Court had no territorial jurisdiction to try the suit as the cause of action did not arise within its jurisdiction; and lastly that there

was no negligence on their part. Both the Courts below disallowed the objections of the defendants and granted a decree in favour of the plaintiff.

Hence this second appeal.

The same grounds have been repeated before me. Grounds Nos 2 and 3 may be disposed of easily. Regarding want of jurisdiction in the Court

which tried the suit, the defendants were not able to establish any prejudice which affected the merits of the case to entitle a reversal of the decree

on the ground of want of jurisdiction assuming that the Court had no jurisdiction. The question of negligence is one of fact and the Courts below

arrived at a concurrent finding that the plaintiff was able to establish negligence on the part of defendants as they did not take the simple precaution

of not selling the shares to the bank itself. There is no ground to interfere with the finding of fact.

There remains the question of limitation. Under Article 90, Limitation Act, for ""other suits by principals against agents for neglect or misconduct

a period of three years is provided for and time begins to run from ""when the neglect or misconduct becomes known to the plaintiff"". It was argued

on behalf of the appellant that on the facts as stated, above, the plaintiff had definite knowledge that the shares were sold to the bank at least on

20-4-1939 and as the suit was filed more than three years from the date it was barred by limitation. But it must be mentioned that by that date no

damage in fact had accrued to the plaintiff. The plaintiff was later called upon to pay the calls and it was not until 20-4-1945 that the last of the

payments was made, the first of such payments having been made on 13-3-1944. If the period of limitation is to be counted from those dates,

undoubtedly the suit is in time. But unfortunately, that is not the language of the third column of Article 90 Limitation Act.

In answer to the contention of the learned counsel for the appellant, the respondent''s learned counsel relied upon Section 24 Limitation Act,

which provided that

in the case of a suit for compensation for an act which does not give rise to a cause of action unless some specific injury actually results therefrom,

the period of limitation shall be computed from the time when the injury results.

I at first thought that this section would have application only to suits based on a cause of action in which the claim for damage is an essential part

as in the case of actions for slander. But such a doubt is dispelled by the illustration to the section and also by the decisions which have applied that

section to different articles of the Limitation Act. --'' Govind Narayan Kakade Vs. Rangnath Gopal Rajopadhye, , is a case of misfeasance

summons against directors for loss occasioned by their negligence. It was held that the application was governed by Article 120, Limitation Act,

and the cause of action to make the application arose, within the meaning of Section 24 Limitation Act, when the actual damages had resulted. It is

an instance, therefore, where the time from which period begins to run under the third column of the Limitation Act was extended by invoking the

provisions of Section 24, Limitation Act. Similarly in -- Kedar Nath Vs. Har Govind, , Section 24, Limitation Act was invoked to a case to which

Article 116 applied. In -- Jagannath Marwari Vs. Kalidas Raha, . the suit was for damages for malfeasance based on an implied covenant that the

surface owner had an inherent right of support from the, owner of underground mines. It was held that such a suit was governed by Article 115,

Limitation Act, & u/s 24, Limitation Act, the cause of action arose from the date when the injury had resulted to the plaintiff and not from the date

of malfeasance or mis-feasance provided for in the Article.

In the light of these decisions, in my opinion, the third column in Article 90 must be read with the modification contained in Section 24, Limitation

Act, as the present is an action in which no cause of action could have been complete to the plaintiff unless and until the specific injury had actually

resulted. Under the section, the period of limitation should be computed from the date when the injury resulted. So, reading the Article and the

section together, the present suit which was instituted within three years from the date when the injury actually resulted to the plaintiff, i.e., the date

when he made the payments is clearly within time.

The appellant''s advocate drew my attention to a decision of a single Judge of this Court in --'' (D), in which Article 90 was applied and the suit

was held to be barred by limitation but Section 24 was not considered by the learned Judge. With great respect I am unable to follow the decision

in that case. The other decisions relied on by the learned advocate for the appellant, --''Annamalai Chettiar v. Cowasji'', AIR 1938 Rang, 258 (E);

-- ''Janki Kocr v. Mahabir Prasad'', AIR 1914 Cal 883 (F) and --''Saw Hla Pru v. S. S. Halkar'', AIR 1932 Rang, 1 (G), do not at all throw any

light upon the question which arises for consideration in the present case where the date of knowledge is different from the date when the damage

actually accrued or resulted. In cases where the two dates coincide, there is no difficulty in applying Article 90, as in that event the period of

limitation begins to run from the date of knowledge, which is also the date when the damage has resulted. These decisions did not consider -- and

perhaps there was no necessity for considering -- the applicability of Section 24, Limitation Act.

I am, therefore, of opinion that the view taken by the Courts below that the suit was not barred by limitation is correct and the second appeal is

dismissed with costs. No leave.